The U.S. is able to maintain a large trade deficit because:
A) when the business cycle is in a boom, it will be a trade surplus.
B) it is balanced by a large capital surplus.
C) it is balanced by a large capital deficit.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

The U.S. is able to maintain a large trade deficit because it is balanced by a large capital surplus. This means that despite importing more goods than it exports, the U.S. is able to offset this deficit by attracting large amounts of foreign investment, such as through purchasing U.S. capital assets like real estate or stocks.

The US Is Able to Maintain a Large Trade Deficit Because